What effect would the sale of a company's trading securities at their carrying amounts for cash have on each of the following ratios?

Question

Quizplus · Accepted Answer

Choice "A" is correct. Trading securities are both current assets and quick assets. If they are sold for their carrying value, then both total current assets and total quick assets remain constant since one type of current asset and quick asset is traded for another. Thus, both the current ratio and the quick ratio would be unaffected by the sale of trading securities. Choices "B", "C", and "D" are incorrect, per the above Explanation.

What Effect Would the Sale of a Company's Trading Securities